In order to acquire a property that is below its expected value in the market, it would be great to look into foreclosure auctions. County assessors as well as banks hold foreclosed real estates in order to recoup the funds that were not paid– either balances on mortgage or taxes on the property. It could be crucial to comprehend the variations of what you have decided to bid, so it is much safer not to buy a property that wouldn’t make a profit.
If you decide on purchasing a foreclosed home, you will have to be knowledgeable or at least aware of how it actually works. Here are some tips on how home foreclosure auctions work:
- Know the different types of auctions
Before you go to the auction, it is advisable to identify the type of auction that you are about to attend. You can find a list of auctions online or on the advertisement page of any news publications locally.
There are two types of auctions: the tax auctions and the foreclosure auctions. Tax auctions involve property owners that have become delinquent on taxes. It is the type of auction that doesn’t sell the property. What they sell is the lien of the delinquent tax of the property. It offers the buyer the choice of repaying the investment as well as the interest once the property owner pays off the debt on his tax. If the owner fails to reconcile the interest and the taxes, the foreclosure process will then take its place.
Another type is the foreclosure auction whereas the bank holds auctions when the property owners become delinquent on payments for the mortgage. This is usually done on the property itself, or it could also be at the bank. Don’t be shocked when the price or value of the property starts higher than your expected cost. That is when the bidding starts.
You can find foreclosure auctions online. This makes everything transparent and more convenient for you.
- At the auction
For neophyte attendees, they might feel intimidated, for auctions are often full of energy. Representatives of the bank and investors usually fill up the room.
The auctioneer has a property list as he announces each one with a starting bid and the property descriptions. It is a wise move if you familiarize first the rules and the procedure of the auction before you decide to register. You might as well bring check and cash for this event. Some auctions will allow deposit upon winning the bid. Some will require you to pay in full.
Bidding is fast. You may bid using your number and state your price. When you win, you may now go to the clearing desk to settle the payment and fill out some paperwork.
- Observe potential problems
All properties auctioned have its “buyer beware” notion. The properties on auctions were often considered as the most distressed properties that investors from real estate buy. Because of this risk, you might want to do research first on the property that you are eyeing. It is advisable to visit the property first before the auction begins. You must always observe the potential problems before making a decision.
Beware of properties that were filed for bankruptcy for it can prolong the foreclosure process. As much as possible, focus on the property that has no issues regarding its tax and has completed the foreclosure process, so everything could be settled quickly in the auction.
Auctions offer direct properties that are in good condition at a lower price. You just have to be careful and smart in bidding. Foreclosed properties aren’t always great; hence, it is safe to be observant and careful in making a decision upon purchasing. It is best to research first before buying. Keep in mind that this deals with a huge amount of money, so be extra careful. Always look into its advantages.
Categories: Real Estate